DESCRIPTION

MEASURE

NEGATIVE PUBLICITY

The Group relies on, among other things, brand and reputation to attract and retain new customers and employees. Negative publicity or disclosures regarding the Group may, regardless of whether they relate to correct information or not, worsen the Group’s reputation. Furthermore, negative publicity relating to any of the Group’s products or brands may affect demand for said products.

The Group works actively with among other things, brand marketing. The Group continuously monitors all publicity about the subsidiaries and brands for preventive purposes.

RISKS RELATED TO COMPANY ACQUISITIONS

From time to time, the Group may evaluate potential acquisitions in accordance with the Group’s strategic goals. The possibility of implementing acquisition strategies may be limited by external factors, such as competition, financing opportunities, the marketsituation and price levels of investment objects. It is possible that the Group’s acquisition strategy cannot be followed transactions may have a negative impact on the Group’s financial position.

The Group shall focus on its own acquisition strategy and evaluate it continuously and on an ongoing basis. When evaluating potential acquisitions, the Group shall take precautionary measures, such as hiring external experts to carry out legal and financial due diligence.

CORPORATE GOVERNANCE

Each company within the Group is financially integrated but consistsm of separate operational units. DistIT relies on the subsidiaries to conduct their respective operations in accordance with established strategies, budgets and policies.
There is a risk that DistIT does not have sufficient operational control over the other Group companies, which may have a negative impact on the Group’s position. The Group relies mainly on its employees to ensure that operations are conducted in accordance with the Group companies’ respective internal corporate policies for governance and compliance. There is a risk that the Group’s employees violate internal policies, which may expose the Group to risks, such as breach of contract, conclusion of conflicting agreements, violations of the law, and breaches of regulations, etc.

The Group shall exercise its control over the Group companies by routinely requesting reports, having an ongoing dialogue, and reconciling previously submitted reports on a continuous basis. Furthermore, the CEOs of each subsidiary shall participate when necessary and at a minimum of two boardmeetings annually for a review and significant operational decisions.

ECONOMIC GROWTH PROSPECTS

The economic growth prospectsare difficult to assess and are important for the Group’s sales and earnings development.

Management closely monitors the economical growth. The Group’s customers are in several industries and can be both corporate customers and customers who sell to end consumers, which reduces a sensitive economic climate.

DESCRIPTION

MEASURE

INDUSTRY AND MARKET

Changes in the IT industry, with its rapid product changes and technology development, may be associated with a greater degree of uncertainty than for companies in more stable industries and markets with minor changes.

The Group works continuously and actively to limit this risk through continued careful product selection and close collaboration with current and future suppliers and customers.

DISTRIBUTOR’S ROLE

The distributor’s role is changing, partly
due to today’s advanced Internet technology, and development of new logistics and distribution services. The Internet can make it possible for both retailers and end customers to find and contact the manufacturer directly. The Internet can make it possible for international and European distributors to take market share from the Group. New logistics and distribution services make it possible for providers to self-distribute their products.

Through an increasing share of sales of our own brand labels, we have strengthened our position against foreign competitors and created added value in our offers to end customers that are difficult for others to compete with.

REGULATORY RISKS

DistIT’s operations are not subject to licence, but are covered by laws, rules and standards regarding, among other things, taxes, personnel, the environment and product safety. If the Group does not comply with such rules, it could, for example, result in the Group being ordered to pay penalties. Unforeseen problems with the quality of the products

could further damage the Group’s reputation and lead to increased costs for product warranties, which would accordingly have a negative impact on the Group’s resutls and financial position (see more below, under “Risks related to product quality and product safety”).

The Group carefully observes applicable laws and regulations to ensure that all operations are conducted in accordance with applicable rules, laws and standards. New rules, laws and standards are monitored and analysed, and, if necessary, measures are taken to ensure full compliance. Deviations are reported on an ongoing basis to company management in accordance with established proceduresand policies. Any major deviations are reported to the Board.

RISKS RELATED TO PRODUCT QUALITY AND PRODUCT SAFETY

The products Distit and its subsidiaries provide can, in the event of poor quality, cause damage, to both person and property, for example, other products that are installed together with the damaged products or components.

For own brand labels, an extended life-long warranty period is issued .In the event of deficiencies in product quality and product safety, the companies are required to replace or repair the damaged product. In the event of a sharp increase in compensation claims according to issued guarantees, this may result in a negative impact on the Group’s results and financial position.

KEY PERSONNEL AND EMPLOYEES

The Group is dependent on key personnel,
usually senior executives. The Group’s development is also dependent on the ability to recruit and retain qualified employees.

We work to create an attractive work environment with good development opportunities and to be a learning organisation where knowledge and experiences are shared between and by employees. We are also actively seeking to secure senior executives in the long term, primarily through option programmes.

CUSTOMERS

The Group offers IT products and accessories to a large number of customer groups in most industries and market segments. A general decline in demand for IT products may therefore have a negative effect on the Group’s operations.

We work continuously to create long-term relationships with our current customers, while actively working on acquiring new customers. We have also significantly broadened our product range to reduce dependence on individual products and product groups. This work continues.

PRICE PRESSURE

The Group’s operations are conducted in a competitive industry which, among other things, can be affected by price pressure, which in turn drives demands for cost-effective solutions. In recent years, we have seen increasing price pressure in the market, which has partly led to declining margins for certain product groups.

The Group has an active procurement strategy based on long-term relationships with suppliers in Asia and Europe. Through these collaborations, we have ensured that we can meet customers’ demands for lower prices and increasing margins. Together with our long-term approach to both customer and supplier relationships, we have ensured sustainability in a changing market.

COMPETITION

Competing companies may increase competition for the Group’s products.

Despite the fact that the subsidiaries are constantly trying to adapt to the current competitive situation, we may be forced to carry out costly restructuring of the operations in order to maintain our market position and profitability. Growth is also an important way of securing the best purchase prices based on increasing volumes.

STOCK DEPENDENCE

A distributor of physical products is dependent on their stock.

The Group takes measures through collaborations with the Group’s logistics partners and its own reasonable measures to protect its stock from fire risk, water damage and theft.

SUPPLIERS

To be able to sell and deliver products, the Group is dependent on external deliveries meeting agreed requirements relating to, for example, quantity, quality and delivery time. Incorrect, delayed or missing deliveries from suppliers can mean that the subsidiaries’ deliveries in turn are delayed, or are defective or incorrect, which can result in reduced sales and thereby negatively affect our operations, financial position and results

We continuously evaluate and develop ourquality criteria, which we ensureour suppliers can meet through our internal processes. This is done, among other things, through close contact and regularly visiting them, together with quality assessments and quality tests performed by third parties.

DEPEDENCE ON THIRD PARTIES FOR INVENTORY MANAGEMENT

The Group engages third parties for warehousing, inventory management and logistics. There is a risk that such third parties will not deliver products in accordance with set conditions, that the price of the services will increase, or damage to storage facilities, such as fire, water or theft, will occur. Any such risk may have a negative impact on the Group’s operations.

The Group companies shall limit the contract period for agreements with third parties to a maximum of five years. Furthermore, the Group companies shall maintain a continuous dialogue with each third party in order to find improvement measures and streamline work. The agreements with third-party companies are carefully regulated in agreements which, for example, state requirements for delivery times, etc.

ENVIROMENTAL RISKS

The Group’s operations are not regulated by law or subject to any license. There is a risk that the products which the Group distributes will be subject to additional environmental laws, >rules or regulations, or that additional taxes or fees will be introduced or added, which may have a negative impact on the Group’s financial position.

The Group has developed an action plan based on the Group’s environmental policy, which, for example, sets environmental requirements for suppliers, products and services. The environmental policy is continuously monitored and updated in accordance with current environmental laws and regulations.

INADEQUATE PROCEDURES OR LACK OF CONTROLS

Within the framework of day-to-day operations, the Group may incur losses due toinadequate procedures, lack of controls, irregularities, or external factors. If the Group’s warehouses or products therein are damaged, for example as a result of a fire or other event, or delays in distribution, or if any of the warehouses had to close, or if a third party providing warehousing services terminates the collaboration or activities, it may lead to losses for the Group due to delayed deliveries.

All the Group’s companies have a lead in
their orders with suppliers based on various parameters and lead times. The Group has also taken out business interruption insurance for all the Group’s companies, which covers any losses.

INTELLECTUAL PROPERTY RIGHTS

Sales of some of the Group’s products depend on brandsand domain names. If the Group’s protection of its brands or domain names is insufficient, or if the Group violates the intellectual property rights of third parties, this may result in lower sales and revenues and have a negative impact on the Group’s position.

The Group actively cultivates and follows up its own brand labels and domain names through, among other things, national and European trademark registrations.

DISPUTES

There is a risk that the Group will become involved in future disputes. The results of any ongoing or future investigations, proceedings, disputes or arbitration proceedings initiated by customers or other counterparties, supervisory authorities or bodies cannot be predicted. Consequently unfavourable settlement or decision for the Group may entail significant fines, damages and/or negative publicity, which may have a negative impact on the Group’s operations.

The Group has broad competence and a good network of expertise, as well as the legal resources for handling disputes and arbitration proceedings. Any ongoing disputes are reported on an ongoing basis and described in quarterly reports.

INSURANCE RISKS

The Group is exposed to various types of risks, such as product liability, property damage, third party liability, and interuptions in operations, including events caused by natural disasters and other events beyond the Group’s control. In such a case, the Group may be obliged to compensate for losses, damages, and expenses.

The Group has an ongoing overview of all the Group’s companies insurances, and procures and adapts existing insurances to the ongoing operations.

RISKS RELATED TO IT INFRASTRUCTURE

The Group is dependent on its IT system for operating important business systems, including administrative and financial functions. Interruptions, such as downtime of network servers, virus attacks, and other disruptions or errors in IT systems, can occur and have a negative impact on the Group’s operations. In addition, insufficient strategies regarding IT and outsourcing, as well as documentation of IT systems and strategies, can lead to failures in the Group’s technical systems and cause disruptions in the Group’s operations.

All the Group’s companies have their own resources that are integrated into each company’s operations, and take care of the companies’ IT systems and their various functions.

DESCPRIPTION

MEASURE

CURRENCY RISK

The currency risk relates to how the value of financial instruments varies due to changes in exchange rates.

The Group’s measures, in order to manage transactional currency risk, are to buy currency in the event of identified needs in order to minimise the short-term impact on results and at the same time create long-term room for manoeuvre.

INTEREST RATE RISK

The interest rate risk is in the form of the value of a financial instrument varying due to changes in market interest rates.

The Group’s credit runs with variable interest rates that are in part renegotiated on an annual basis. No investment, other than ownholding of private corporate bond of a nominal MSEK 74.4, as of 31 December 2020, is currently made in capital instruments.

CREDIT RISK

The Group’s credit risk mainly constitutes the solvency of the subsidiaries’ customers.

Credit assessment of customers is standard according to established procedures. In most cases, credit insurance is used as a means of reducing credit risk. Credit losses have historically been low, but increasing competition in the industry has meant poorer opportunities for credit insurance for customers and slightly higher credit losses.

LIQUIDITY RISK

Liquidity risk means that financing cannot be obtained, or only at significantly increasing costs.

The Group’s liquidity risk is considered to be relatively limited. Ongoing dialogue and communication takes place with lenders such as banks,financial institutionsand bondholders.

TAX RISK

DistIT Group conducts its operations in the Nordic countries. Operations in these countries are conducted in accordance with the Group’s interpretation of applicable laws, rules and case law, as well as the tax authorities’ administrative practices. However, it cannot be ruled out that tax authorities may make other assessments in any respect, and that the Group’s previous and current tax situation may change as a result of the tax authorities’ decisions.

The Group’s tax situation is considered to be relatively secure. Ongoing monitoring is carried out in connection with audits, and through regular contact with the relevant authorities in the Nordic markets.

DEPENDENCE ON SUBSIDIARIES

DistIT is a holding company and the Group’s operations are mainly conducted through its subsidiaries. DistIT is therefore dependent on its subsidiaries in order to meet its payment obligations.

DistIT liquidity through the Group’s cash pool, intra-group loans, dividends or other value transfers in order for DistIT to be able to meet its payment obligations. However, there is a risk that DistIT will not be able to meet its payment obligations if the subsidiaries do not provide such liquidity, or, due to other circumstances, conditions, laws or regulations, are prevented from supplying DistIT with liquid assets.

LOANS

The Group has outstanding interest-bearing liabilities. Such loans may have an impact on the Group’s financial position by limiting the Group’s ability to obtain additional financing for future operations, investments, acquisitions, and other business opportunities.

The Group has a continuous and ongoing dialogue with the Group companies’ banks and other financiers, and adheres to the guidelines required to obtain good financing for various